Piramal Finance Ltd — Q4 FY26

Piramal Finance Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=dzlhcoiqD6g Published: 2 weeks ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Q4 and annual FY2026 earnings conference call hosted by 0:08 8 seconds Pyramal Finance Limited. As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions 0:16 16 seconds after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on 0:24 24 seconds your touchstone phone. The results materials are available on exchanges and the company's website and you may refer 0:31 31 seconds to them during the discussion. Please note that today's discussion may include certain forward-looking statements which must be viewed in conjunction with the 0:39 39 seconds risk and uncertainties that the company faces. These statements are based on management's current expectations and are subject to uncertainty and changes. 0:49 49 seconds On the call today we have with us Mr. Anand Pamal, executive chairman, Mr. Mr. 0:54 54 seconds Jarram Shridharan MD and CEO Mr. Rupin Zeri Group President Mr. Yeshari CEO 1:02 1 minute, 2 seconds wholesale lending Mr. Vikas Singla CFO and Mr. Ravi Singh head of investor relations and strategy. 1:10 1 minute, 10 seconds I now hand the conference over to Mr. 1:12 1 minute, 12 seconds Anand Pamal for his comments. Thank you and over to you sir. 1:19 1 minute, 19 seconds Good afternoon everyone and thank you for joining us today on this call to 1:26 1 minute, 26 seconds discuss the March quarter and fullear FY26 results of Pyramal Finance. As you 1:34 1 minute, 34 seconds all know during the last few weeks of this quarter geopolitical disruptions in 1:40 1 minute, 40 seconds the Gulf have created a volatile global macroeconomic environment. Crude oil 1:47 1 minute, 47 seconds prices have risen sharply. There have been also concerns around the availability of refined products such as 1:55 1 minute, 55 seconds LPG. We believe ongoing diplomatic developments and a potential deescalation could limit the overall 2:03 2 minutes, 3 seconds macro impact on India. At this stage, the effect on India's economy and financial services sector appears 2:12 2 minutes, 12 seconds contained reflecting underlying resilience. Retail petrol and diesel prices have largely remained stable. 2:21 2 minutes, 21 seconds This pricing discipline has played a critical role in containing nearterm inflation, 2:28 2 minutes, 28 seconds preserving domestic demand, and avoiding a spike in retail loan pricing. The government's timely interventions to 2:36 2 minutes, 36 seconds support exporters have helped cushion the impact from ongoing maritime challenges. Overall, while geopolitical 2:45 2 minutes, 45 seconds risks remain a key monitor, India's macroeconomic stability, policy responsiveness, and domestic demand 2:54 2 minutes, 54 seconds strength continues to support the growth outlook. Coming to our results, the 3:01 3 minutes, 1 second company delivered a strong quarter and ended FY26 with several achievements. I'm happy to 3:09 3 minutes, 9 seconds report that we surpassed our targets. we set for ourselves at the start of the year. Our total AUM grew 25% yearonear and crossed the one lakh cr. 3:25 3 minutes, 25 seconds We have completed our AUM mixed transition with a legacy book down 59% 3:32 3 minutes, 32 seconds yearonear to 2,87 crores versus the target of reducing it 3:38 3 minutes, 38 seconds to 3 to three and a half thousand crores. The legacy book is now less than 3:45 3 minutes, 45 seconds 3% of the total AUM versus 66% of our AUM four years ago. This has been 3:54 3 minutes, 54 seconds perhaps the largest and fastest rundown of any wholesale book in our industry. 4:03 4 minutes, 3 seconds Equally unprecedented has been the scale up of our retail business. In FY26, 4:11 4 minutes, 11 seconds it grew 33% yearonear to 8,000 85,85 crores. 4:21 4 minutes, 21 seconds It now forms 85% of total AUM. 4:26 4 minutes, 26 seconds Ours has been the fastest scale up of any retail business among NBFCs. 4:33 4 minutes, 33 seconds It took four years in going from 20,000 crores to 85,000 crores. Uh something 4:41 4 minutes, 41 seconds that other retail NBFCs before us took 5 to 10 10 years um uh to do. More 4:50 4 minutes, 50 seconds importantly, while growing this book, we've sharply lowered our opex ratios and have kept a tight control on risk. 5:01 5 minutes, 1 second In Q4 FY26, the retail asset quality significantly improved across all products. 5:10 5 minutes, 10 seconds Along with our wholesale 2.0 EU, which grew 38% yearonear, our growth AUM 5:18 5 minutes, 18 seconds increased by 33% yearonear versus the 30% target. Asset quality of wholesale 5:26 5 minutes, 26 seconds 2.0 continues to remain robust with zero NPS in this book. 5:34 5 minutes, 34 seconds After breaking even in FY24, the growth business has steadily been improving its 5:41 5 minutes, 41 seconds profitability. In Q4, we exited at RO AU of 2.1% 5:50 5 minutes, 50 seconds versus 1.7% in Q4 FY25. 5:56 5 minutes, 56 seconds For FY26 we have reported a consolidated net profit of 1,56 crores versus the target of 1,300 to,500 crores. 6:09 6 minutes, 9 seconds This was a 3x Y on Y. Year on year in this quarter both our domestic and 6:18 6 minutes, 18 seconds foreign credit ratings witness a round of upgrades. Our domestic long-term debt 6:25 6 minutes, 25 seconds is now rated double A plus by all three leading credit agencies versus double A rating at the last quarter end. 6:35 6 minutes, 35 seconds In Q4, we received deferred consideration proceeds of $148 million towards the sale of Pamal imaging. 6:46 6 minutes, 46 seconds We also concluded the stake sale of Sriam life insurance worth 600 crores. 6:53 6 minutes, 53 seconds We also added 10,110 crores to our assessed tax losses 7:02 7 minutes, 2 seconds totaling total [clears throat] assessed tax losses to 24,600 crores. 7:09 7 minutes, 9 seconds Overall in the last two years we have been consistent in improving our profitability 7:16 7 minutes, 16 seconds along with healthy EUM growth and stability of risk and earnings. As an 7:23 7 minutes, 23 seconds upper layer double A plus rated retailled diversified M N M N M N M N M N M N M N M N M N M N MBFC we are 7:30 7 minutes, 30 seconds privileged to serve over 5 million customers across semi- urban India 7:37 7 minutes, 37 seconds combining physical distribution with technology and AI in our processes we 7:45 7 minutes, 45 seconds remain confident in our ability to deliver steady and healthy earnings growth 7:53 7 minutes, 53 seconds With that, I'll hand over to Jeram to share more details of the results. 8:01 8 minutes, 1 second Thank you, An. Good evening, everyone. 8:04 8 minutes, 4 seconds [clears throat] Earlier this year, you might recall that we introduced our framework for value creation and 8:13 8 minutes, 13 seconds I'm sorry to interrupt, sir, we unable to hear you. 8:19 8 minutes, 19 seconds Sorry about that. Thank you, Anand. Uh good evening everyone. Earlier this year, you might recall that we introduced our framework for value 8:26 8 minutes, 26 seconds creation and long-term alignment with our shareholders. To refresh our memories, the framework had three drivers of value creation: growth, 8:35 8 minutes, 35 seconds profitability, and predictability. And supporting these value drivers, we talked about building a futurep proof AI native company. [clears throat] 8:44 8 minutes, 44 seconds I'd like to start my comments with an evaluation of our Q4 FI26 performance against this framework. Let's start with growth which you can see on page number 8:52 8 minutes, 52 seconds four of our investor presentation. You see here that our AUM was up 33% yearonear in our growth book. On a 9:01 9 minutes, 1 second consol basis AUM was up 2 and a half or sorry 25% yearon year and we ended the year at 1 lak 1,230 crores. 9:13 9 minutes, 13 seconds We thus stay very much on track for our stated goal of one and a half lakh crores by FI28. 9:22 9 minutes, 22 seconds The second vector was profitability on which I'd like to direct your attention to slide five. 9:29 9 minutes, 29 seconds The return on AUM of our growth business increased further as an mentioned to 2.1% in Q4 versus the 1.7% we were at in the same quarter last year. 9:42 9 minutes, 42 seconds The leverage which is AUM2 equity also continued to increase and we are now up at 3.6x in Q4 compared to 3x same 9:52 9 minutes, 52 seconds quarter last year. We continue to progress towards our goal of 4 1/2 to 5x. 9:59 9 minutes, 59 seconds The third vector in our value creation framework was predictability uh on which I'd like to draw your attention to slide number six. In the 10:07 10 minutes, 7 seconds fourth quarter, the growth business delivered a PBT of 495 crores, keeping up the steady and predictable trajectory 10:15 10 minutes, 15 seconds of the last eight quarters. The stability and predictability are also visible in our credit risk outcomes with 10:22 10 minutes, 22 seconds retail 90 plus delinquencies down 20 basis points quarteron quarter to 6%. 10:28 10 minutes, 28 seconds Growth business credit cost was also down marginally quarteron quarter to 1 and a.5%. 10:34 10 minutes, 34 seconds More importantly, as you can see on the page, the performance was extremely steady over the last four years. 10:42 10 minutes, 42 seconds Let's now get into our specific business performance metrics. On the growth business, our retail AUM growth remained 10:50 10 minutes, 50 seconds strong. We ended the fourth quarter with a retail AUM growth of 33% yearonear. 10:55 10 minutes, 55 seconds Dispersements in retail recovered from a a moderate Q3 and were up 34% yearonear 11:02 11 minutes, 2 seconds to 13,1 cr. 11:06 11 minutes, 6 seconds Our mortgage business comprising housing loans and lap grew by 32% yearonear to 57,837 crores. 11:16 11 minutes, 16 seconds Mortgages account for 57% of the total AUM of the company and 67% of the retail aum. 11:24 11 minutes, 24 seconds If you look at slide 24, we have provided this quarter some additional disclosures on subsegments within our HL and lab businesses. 11:35 11 minutes, 35 seconds Over the years, we have expanded our presence in mass affluent home loans and larger ticket lab plus products. 11:44 11 minutes, 44 seconds With our rating upgrade, our ability to serve these segments is significantly higher. 11:50 11 minutes, 50 seconds Retail AU and growth was well diversified across our product categories. all growing at about 20 to 50% yearonear. 11:59 11 minutes, 59 seconds Wholesale 2.0 EUM was up 38% year-on-ear in the first quarter with both real estate and mid-market lending showing 12:06 12 minutes, 6 seconds strong wirewide trends. Growth AUM was collectively thus up 33% yearonear to 98,423 crores. 12:17 12 minutes, 17 seconds If you look at slide 30, our retail customer franchise grew by 22% yearonear to 5.7 million. As Amen 12:27 12 minutes, 27 seconds referred earlier, we've crossed 5 million as our customer franchise this year. Our sourcing from crossell in unsecured disbbursements is around 30%. 12:38 12 minutes, 38 seconds Which we expect to materially improve over coming years. Our cross-ell portfolio comes with significantly lower opex as well as credit costs. 12:49 12 minutes, 49 seconds During the third quarter call, we had guided towards opening 100 new branches in the fourth quarter across three 12:57 12 minutes, 57 seconds formats. We have successfully delivered on that plan. After not expanding our branch network for seven quarters, we 13:04 13 minutes, 4 seconds resumed branch expansion in Q4, for which I'd like to refer you to slide 28. 13:11 13 minutes, 11 seconds In this quarter, we opened 26 full service branches, which we have now represent as urban branches. In addition 13:18 13 minutes, 18 seconds to these, we've also opened 22 gold loan branches and added 60 rural branches, 13:26 13 minutes, 26 seconds which we earlier called micr finance branches. We've now taken our rural network to 136 branches. 13:34 13 minutes, 34 seconds In all, our total branch network has crossed 700 in this quarter and stands at 701 as shown on slides 25 and 27. 13:48 13 minutes, 48 seconds We took meaningful steps forward in this quarter on gold loans and rural lending. 13:53 13 minutes, 53 seconds Starting with flight 25, we launched phase one [clears throat] of our gold loans business with 22 branches in Maharashtra and Telangana. 14:02 14 minutes, 2 seconds As of today, 13 of these gold loan branches are dispersement active. 14:07 14 minutes, 7 seconds We are innovating traditional gold loan product with unique tech and AI based features. We expect to open 180 more 14:15 14 minutes, 15 seconds gold loan branches in FY27 to take our gold loan branch count to approximately 200. 14:22 14 minutes, 22 seconds We are spearheading our emerging rural strategy with microloans as the first product through our 136 rural branches 14:32 14 minutes, 32 seconds which you see on slide 27. Our microl loans aum was up 42% year-on-year from a 14:39 14 minutes, 39 seconds small base to rupees 1,384 crores. 14:45 14 minutes, 45 seconds Moving on to margins, our consolidated level NIM expanded [clears throat] 20 bits quarteron quarter to 6.5%. 14:55 14 minutes, 55 seconds Which you will see on slide 15. You will also see on this slide that the console 15:01 15 minutes, 1 second NIM has been continuing to close the gap with our growth booknim which is 7%. 15:09 15 minutes, 9 seconds Cost of borrowing during the quarter declined by 11 basis points on a Qoq basis to 8.84%. 15:18 15 minutes, 18 seconds Along with actively working on our borrowing mix, the impact of credit rating upgrades should provide a tailwind to our cost of borrowing over the coming years. 15:27 15 minutes, 27 seconds Domestic credit rating upgrade from AA to AA plus has the potential to lower our cost of borrowing by 50 to 80 basis points once we churn our current 15:36 15 minutes, 36 seconds borrowing stack out and replace it with new borrowing. The AA plus rating also offers us access to certain parts of the 15:44 15 minutes, 44 seconds lending market we could not access before thus enhancing our ability to continue delivering industry-leading AUM growth. 15:52 15 minutes, 52 seconds It can also aid expansion of return on A1 and potentially also allows us to lever our balance sheet higher versus what was possible with a double A 16:00 16 minutes rating. All of this could lift steady state ROIs by 3 to four percentage points. 16:09 16 minutes, 9 seconds On retail income, total retail income as seen on slide 21 grew by 35 basis points quarteron 16:17 16 minutes, 17 seconds quarter to 15 12% of loan book. Our yield on loans were stable. The retail 16:25 16 minutes, 25 seconds processing fee amotization continues to catch up to support the overall fee income. There was however a reduction in 16:33 16 minutes, 33 seconds our insurance fee in this quarter due to a change in commercials with our partner primar life 16:41 16 minutes, 41 seconds on opex retail opex to aum further came down by 21 basis points quarteron quartarter to 3.6% peranom in quarter 4. 16:51 16 minutes, 51 seconds You will see this trend on slide 21. 16:54 16 minutes, 54 seconds We have now consistently reduced our opex to AUM ratio for 3 years and have now entered the target range which we had indicated some years earlier. 17:05 17 minutes, 5 seconds While we have restarted our branch expansion, the continued productivity gains for our employees and branches have the potential to take our retail 17:12 17 minutes, 12 seconds opex to aum a little bit lower than current levels over FI27. 17:20 17 minutes, 20 seconds Tech and AI have been key enablers of our growth and productivity enhancement. 17:25 17 minutes, 25 seconds While we have been sharing the in the past the impact of AI across five key business areas, we are now starting to 17:32 17 minutes, 32 seconds share additional input input metrics as well. 17:37 17 minutes, 37 seconds I'd like to draw your attention to slide number seven. Here we have tried to share a metric for overall use of genai 17:45 17 minutes, 45 seconds techniques at pyram. You will see that there is a strong growth in our total token usage across SLMs and LLMs 17:54 17 minutes, 54 seconds in the course of this year showing the high levels of AI adoption in the company. In Q4, our total token volume 18:03 18 minutes, 3 seconds was at 178 billion tokens in the quarter versus 63 billion in the first quarter of this year. 18:11 18 minutes, 11 seconds This compares well with the best of global elite enterprise scale companies in terms of token usage for high 18:19 18 minutes, 19 seconds frequency agentic AI and processing of massive amounts of document data. 18:26 18 minutes, 26 seconds On slides 20 32 and 33 we have shared some more details of our enterprise AI 18:33 18 minutes, 33 seconds strategy PML.AI AI. On slide 32, we introduce a new dashboard on the progress of AI, particularly Gen AI use 18:43 18 minutes, 43 seconds cases across all key aspects of our business. As you can see, AI adoption cuts across sales, underwriting, 18:51 18 minutes, 51 seconds collection, audit and compliance, CX, and people management. 18:57 18 minutes, 57 seconds The next page, slide 33, covers our postquarter AI spotlight. 19:02 19 minutes, 2 seconds Last quarter we had featured collections in our AI spotlight. This quarter we feature operations. 19:10 19 minutes, 10 seconds You can see on this slide that operations productivity has doubled in the last two years. Our AUM has doubled in this period whereas our oper 19:19 19 minutes, 19 seconds operations staff and headcount has remained roughly flat. 19:25 19 minutes, 25 seconds Moving to risk, the risk performance of the company was solid with GPA down 32 basis points quarteron quarter and gross 19:32 19 minutes, 32 seconds business credit cost down slightly quarteron quarter to one and a half%. 19:37 19 minutes, 37 seconds Retail is 87% of our growth AUM and it witnessed significant improvement in Q4 risk across all products. 19:44 19 minutes, 44 seconds Asset quality and unsecured lending showed strong improvement in the last four months. Risk metrics here are broadly back to two year ago levels. 19:54 19 minutes, 54 seconds The microloan portfolio has almost completely normalized as you see in our 90 DPD chart that we share every quarter. 20:03 20 minutes, 3 seconds In our semi-secured business which is used car after 3/4ers of elevated risk metrics we saw a steep fall in Q4. 20:11 20 minutes, 11 seconds In mortgage business risk continues to be quite steady. We had earlier slagged the part of this business as potentially 20:19 20 minutes, 19 seconds problematic given increasing risk levels. This was around smaller ticket mortgages with MSME customers. Over this 20:26 20 minutes, 26 seconds last quarter, however, we have seen the segment stabilize and perform noticeably better than before. We will, however, continue to track the segment closely. 20:37 20 minutes, 37 seconds So, as you can see, headline riskmetrics are all stable to improving in Q4. 20:42 20 minutes, 42 seconds However, we are closely watching segments that could potentially be vulnerable to the ongoing conflict in the Middle East. We had originally taken 20:50 20 minutes, 50 seconds MSMES in the FNB sector as the epicenter of potential vulnerability and impact. 20:58 20 minutes, 58 seconds But we have since expanded our watch list to include a broader set of sensitive sectors including travel and 21:05 21 minutes, 5 seconds logistics, textar, gems and jewelry, food processing, etc. As of now, risk metrics here all appear contained. 21:14 21 minutes, 14 seconds Bounce rates in these vulnerable sectors in April have come in at the same levels as March. 21:21 21 minutes, 21 seconds We use AI to rapidly scan and classify hundreds of industry subsegments by their sensitivity to the Iran conflict, 21:28 21 minutes, 28 seconds mapping direct impact first and progressively identifying knock-on effects across connected sectors. This use of AI turned what would have been 21:37 21 minutes, 37 seconds weeks of manual analysis into near realtime exercise allowing us to move quickly from portfolio diagnosis to 21:44 21 minutes, 44 seconds targeted product level action. We have thus tightened fresh underwriting in these sensitive sectors. We believe that customers from these sectors who also 21:53 21 minutes, 53 seconds have moderate to high pre-existing leverage are likely to be the most vulnerable. That is the segment where we are taking most of our credit actions right now. 22:03 22 minutes, 3 seconds Overall, we have not seen any visible impact of the conflict on retail riskmetrics yet. We remain, however, watchful and ready to act as necessary. 22:13 22 minutes, 13 seconds On the liability side of potential impact of the conflict, we continue to maintain strong liquidity buffers, our average quarterly LCR in Q4 was 450%. 22:26 22 minutes, 26 seconds We have cash and cash equivalence of 8,640 crores, equivalent to 8% of all our assets. 22:34 22 minutes, 34 seconds CPS [clears throat] form less than 1% of our liability stack as of March end. 22:40 22 minutes, 40 seconds This conservative position both minimizes our liquidity risk as well as maximizes the opportunity for us to 22:48 22 minutes, 48 seconds benefit from falling rates at the short end. 22:51 22 minutes, 51 seconds And finally, let me come back to the overall company. Having met all our stated targets for FI26 which Anand referred to earlier, we have refreshed 22:59 22 minutes, 59 seconds our targets for FI27 which we have listed on slide number 17. 23:05 23 minutes, 5 seconds We are sharing three pieces of goals and guidance for the coming year. We expect another year of approximately 25% growth in total AUM. 23:17 23 minutes, 17 seconds We expect consol profits to also grow at approximately 50%. 23:23 23 minutes, 23 seconds And we expect to exit FI27 with a return on AUM of approximately 2.5% versus the 2.1% we reported in Q4 FI26. 23:36 23 minutes, 36 seconds You'll notice here that we have not called out a separation in language between console and growth. That's because given the relatively small size 23:44 23 minutes, 44 seconds of the legacy book, one should expect that somewhere along this course of this year, we would start we would see reporting legacy as a separate segment. 23:55 23 minutes, 55 seconds So you should expect that to happen sometime during the course of this year, though we we are not calling out a specific date on that yet. With that, 24:03 24 minutes, 3 seconds I'll hand over the call to Yash to discuss our wholesale business. Yash. 24:07 24 minutes, 7 seconds Thanks, Jam. [clears throat] As at March 2026, the wholesale 2.0 book stood at 12,538 24:16 24 minutes, 16 seconds crores, which was a growth of about 38% yearonear. Real estate to CMML mix stood at 7327. 24:25 24 minutes, 25 seconds Average ticket size of the book was 53 cr and the average yield of the portfolio was stable at 14.4 cr. 24:33 24 minutes, 33 seconds Asset quality remained robust with zero NPS in this book. As Anand mentioned earlier during the year we dispersed 9,292 cr with fresh sanctions across 135 days. 24:47 24 minutes, 47 seconds Repeatments continued to be robust as we received 5,859 cr or about 60% 63% equivalent of the 24:55 24 minutes, 55 seconds dispersed amount during the year. In the fourth quarter, the prepayments were particularly strong amount amounting to almost 82% of the new dispersements. 25:06 25 minutes, 6 seconds While strong rates of repayments continue to be a major growth headwind for us, it also highlights that the 25:13 25 minutes, 13 seconds portfolio seasoned very well and is performing well ahead of uh our underwriting. In fact, due to these 25:21 25 minutes, 21 seconds significant prepayments, almost 50% of the contractual repayments due to us in FI27 have already been paid by our borrowers 25:30 25 minutes, 30 seconds to us to date. On wholesale 1.0 or legacy book, we ended the book at 2,87 25:38 25 minutes, 38 seconds cr which was a reduction of 59% during the year. 25:43 25 minutes, 43 seconds This is now a very small part of our balance sheet and we will continue to work on resolution of this book over the following quarters. Before handing over 25:51 25 minutes, 51 seconds to Vikash, I will also say that we continue to monitor the impact of the Iran Iran war on the real estate and 25:58 25 minutes, 58 seconds CMML segments. Since the war broke out in Feb to date, our portfolio sales collections and other operating 26:06 26 minutes, 6 seconds parameters have continued to remain very strong. We also feel good about the granularity and the diversified nature of our portfolio but we'll continue to 26:15 26 minutes, 15 seconds monitor our credits proactively as we progress from here. With this over to you. 26:20 26 minutes, 20 seconds Thank you. Yes. Moving to our financial performance. In Q4 FI26 we reported 26:27 26 minutes, 27 seconds consorted net profit of 52 cr versus Q4 of Fi by net profit of 102 cr. Full year 26:37 26 minutes, 37 seconds FI26 net profit was 1,56 cr versus 485 cr in FI25. 26:44 26 minutes, 44 seconds Performer PBT for growth business stood at 495 cr in Q4 FI26 implying a growth of 61% yearonear. 26:55 26 minutes, 55 seconds Growth business opex grew by 12% yearonear versus income growth [clears throat] of 24% yearonear. 27:03 27 minutes, 3 seconds Operating profit thus grew by 37% yearonear to 850 cr. In Q4 FI26 we 27:12 27 minutes, 12 seconds reported gross business credit cost of 1.5% versus 1.6% in Q3. 27:19 27 minutes, 19 seconds Our total GNPA and NNPA were down 30 bits quarteron quarter each to 2.3% and 27:26 27 minutes, 26 seconds 1.6% respectively. Our net worth stands at 28,191 27:33 27 minutes, 33 seconds cr. Our capital adequacy is very strong at 19.8% as of March 26. Our profitability 27:43 27 minutes, 43 seconds continues to improve and we also have investments that can potentially be divested to unlock capital. Just as we 27:51 27 minutes, 51 seconds have done in the past, we remain committed to maintain a comfortable margin of safety over regulatory capital requirement. We will use all the 27:59 27 minutes, 59 seconds available levers at our disposal to ensure that with these remarks, I would now like to open the floor for questions. Thank you. 28:08 28 minutes, 8 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchdown telephone. 28:19 28 minutes, 19 seconds If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies 28:28 28 minutes, 28 seconds and gentlemen, we will wait for a moment while the question queue assembles. 28:34 28 minutes, 34 seconds We'll take our first question from the line of Shrea Shivani from Namora. Please go ahead. Yeah. Hi, thank you for the opportunity. 28:44 28 minutes, 44 seconds Uh I have Hi, I have two questions. Uh my first question is on the console uh 28:51 28 minutes, 51 seconds NIM and the growth NIM. Uh the gap between these two has been narrowing. 28:56 28 minutes, 56 seconds It's at about 50 bips as of fourth quarter, right? 6 and a half and 7% or so. Um the legacy book is now like very 29:04 29 minutes, 4 seconds minimal. Uh where do we see our I'm assuming the growth uh uh NIM is where the console name will reach and then 29:12 29 minutes, 12 seconds beyond that what are the levers for expansion? I mean I get your gold loan and MFI uh segment would be one of the 29:18 29 minutes, 18 seconds major levers. Um uh and my second question is on the legacy book. I mean that that that scaleown is quite 29:25 29 minutes, 25 seconds impressive. Um fair to say that majority of it is actually SRS and stage one. Uh 29:32 29 minutes, 32 seconds so how should we think about the legacy book movement over the next two years? 29:37 29 minutes, 37 seconds Uh it's at about 3% or whatever less than 3% of your uh AUM mix right now. 29:43 29 minutes, 43 seconds Yeah. Thank you Shrea. So first question where is the console name headed? 29:48 29 minutes, 48 seconds Obviously console name and growth name will become effectively the same uh you know hopefully towards the latter half of uh of this coming year as uh the the legacy book becomes smaller and smaller. 30:00 30 minutes Now what is the and growth nim of course today is about 7%. What are the levers on the growth book name itself? Uh there 30:07 30 minutes, 7 seconds are two main levers. One is exactly what you said which is product mix on the asset side uh which is increase in 30:14 30 minutes, 14 seconds unsecured which which we have guided before. We would like unsecured to be about 400 basis points larger 400 to 500 30:21 30 minutes, 21 seconds basis points larger in our mix compared to where we are right now plus some of the new products that we are uh that we are launching particularly gold um which is secured but has but has high yield. 30:30 30 minutes, 30 seconds So between the two of them, the mixed story is uh is is going to be a little bit margin accrative. But even more importantly on the liability side, um 30:39 30 minutes, 39 seconds the double A+ rating has not yet shown its effect on our cost of borrowing. And uh as as I mentioned before, I expect 30:47 30 minutes, 47 seconds the double A plus impact to be about 50 to 80 basis points over the course of the coming uh 3 years. Uh because 3 years is the time of churn of our of our 30:55 30 minutes, 55 seconds liability side book. So that should come in as well. So those are the two big levers, one on the asset side and one on the liability side. Uh which uh which 31:02 31 minutes, 2 seconds should help lift our um our NYS on uh on an overall console uh console basis um 31:09 31 minutes, 9 seconds once we have uh once we have merged everything together. Now to your question on the the legacy book, we are 31:15 31 minutes, 15 seconds at less than 3% of uh of the portfolio here. Um you should you should see uh if 31:24 31 minutes, 24 seconds we we're talking about legacy book next year at this time you would be very very surprised uh it'll it'll become irrelevant by the latter half of this 31:32 31 minutes, 32 seconds year by Q4 of this year it it will become kind of so small to be irrelevant and and that's why our statement earlier that uh that you will just see us talk 31:41 31 minutes, 41 seconds about one set of numbers rather than x of legacy numbers by the end of this year. 31:45 31 minutes, 45 seconds Okay that's great to hear. Just a followup on the scale up of the unsecured book. Um so fair to say the 31:53 31 minutes, 53 seconds unsecured book scaleup would be uh equally across digital loans which is aggregated loans and your own uh sourced 32:02 32 minutes, 2 seconds uh UBL book or one would take precedence over the other or you you'd focus more on [clears throat] one and uh so a 32:10 32 minutes, 10 seconds little bit on risk performance like as it happens the last few quarters digital loans have performed super well if you 32:16 32 minutes, 16 seconds see page 22 you look at the risk performance of digital loans which is on the bottom left. It's been insane good. 32:23 32 minutes, 23 seconds Uh so currently we are somewhat bullish on that segment. But if it turns, if that curve starts to turn, we'll be equally ruthless in actually starting to 32:31 32 minutes, 31 seconds cut that and uh go even more uh towards uh towards branch business. If you see the salary PL chart on the same page, 32:38 32 minutes, 38 seconds you'll see it's been rock steady. Uh right, it's been really really strong. 32:41 32 minutes, 41 seconds So we love both our branch based businesses as well as our digital businesses which takes precedence let's say a month-on-month quarteronquarter call depending on what the risk curves 32:49 32 minutes, 49 seconds look like. So we don't have a philosophical bias on one versus the other but it's easier to scale up digital loans faster than the branchled salaried 32:58 32 minutes, 58 seconds PL or UB that's true but it's also tends to be more volatile so in bad times we also cut it much more ruthlessly so you might recall that when digital was going 33:05 33 minutes, 5 seconds through its peak in FI25 we had cut it by more than 60%. So volumes also disappear there very very quickly. 33:12 33 minutes, 12 seconds Right. Right. This is very useful. Um congrats on a good set of numbers. Thank you and all the best. Thank you. Sh. 33:20 33 minutes, 20 seconds Thank you. 33:21 33 minutes, 21 seconds Next question is from the line of Harshidal from FMG invest. Please go ahead. Hi. Hi. 33:29 33 minutes, 29 seconds Yes. 33:30 33 minutes, 30 seconds The audio is not clear. Harsh. Can you use your handset mode please? Hi. Is this better? much better. 33:38 33 minutes, 38 seconds Yes, please go ahead. 33:39 33 minutes, 39 seconds Yeah. Uh the question was uh two from so one was on the other income or big fee income for the growth business itself. 33:48 33 minutes, 48 seconds uh so you mentioned the statement about some change in agree arrangement with the life insurance partner but like if 33:54 33 minutes, 54 seconds in general I look at that number as a percentage of our retail growth a year that's now I think five for 4Q and 34:03 34 minutes, 3 seconds obviously there was some amotization impact which was also going on if I'm not wrong but where we should look at 34:09 34 minutes, 9 seconds this number because given our asset mix ideally 8090 basis points 7080 basis 34:16 34 minutes, 16 seconds points is something which is which is uh not unreasonable. Yes. 34:21 34 minutes, 21 seconds Uh that was your point is correct. What we have in Q4 is low. Uh it needs to go up. It will 34:28 34 minutes, 28 seconds go up. There was a one-time event that we had in Q4 where we reversed some fee income to in in aid of our associate company which is our life insurance 34:37 34 minutes, 37 seconds company. Um for for some technical reasons I I'd not like to go into that here. uh but uh but it's a onetime 34:45 34 minutes, 45 seconds adjustment which we uh which we did uh to uh to help them out and it is a company where we own 50% so there is there's value acrewing eventually uh 34:54 34 minutes, 54 seconds happening to us so we're not we're not particularly worried about it um but uh but your point on where that fee income should head is absolutely correct and 35:01 35 minutes, 1 second you will see normal service being restored um very quickly. 35:06 35 minutes, 6 seconds Got it. Got it. Got it. And uh the second question was on the the P. So right now we are standing at 2.1 uh on 35:14 35 minutes, 14 seconds the growth and this is with 1 and a half% credit cost and probably if we if we plan to end FI27 with 2.5 35:24 35 minutes, 24 seconds uh then I'm just trying to marry these two facts that our credit cost in general you said that uh should be 1.92% 35:33 35 minutes, 33 seconds as a steady state one. So are we are which is 40 basis points higher than today's number. So are we expecting FI27 35:40 35 minutes, 40 seconds credit cost to remain benign because of probably uh for for whatever reasons or do you think that it's it's the margin 35:49 35 minutes, 49 seconds and the cost levers uh and free income levers etc which is helping you um stick on to that 2.5 number because I'm the 35:58 35 minutes, 58 seconds because 4Q 2.1 is on the help of that 40 basis points lower than sustainable credit cost. 36:03 36 minutes, 3 seconds Correct. That's a great question, Hashid. And the answer is pretty much the second half of what you said. Um, yes, you're right that we have been 36:12 36 minutes, 12 seconds surprised positively by how good the risk environment has been. I thought risk environment through the year was good. Q4 turned out to be even better. 36:19 36 minutes, 19 seconds Um, so yes, we are mildly positively surprised. But you will also notice a fact in our in our in our presentation and if you look at some of the new 36:27 36 minutes, 27 seconds disclosures we have started, which is the the uh sub-segment level disclosures on mortgages etc., You will see that over this year we have started doing a 36:36 36 minutes, 36 seconds little bit of more prime like business right you will see more of that coming forward which will help our um our our overall risk performance let's see how 36:44 36 minutes, 44 seconds much we are able to do it etc but importantly see there are there are three things that can change or that will change in our uh in our due pond uh 36:52 36 minutes, 52 seconds opex to assets which will continue to get better we believe there's another 50 basis points of play there uh cost of borrowing which as I mentioned before 37:01 37 minutes, 1 second has 50 to 80 basis points over a three-year period. Uh right. So that should get better on a on a c interest rate cycle adjusted basis. Uh right. And 37:09 37 minutes, 9 seconds then there is this credit cost which will probably go in the opposite direction which you know if my earlier expectations are correct it will probably kind of eat away some of the 37:17 37 minutes, 17 seconds delta but we believe there are there is enough play in the first two that we can hit two and a half by Q4 of the of the coming year even if there is some normalization of of credit cost. 37:28 37 minutes, 28 seconds Great. uh sir and last question Jam was so clearly legacy book is uh frankly is known to be very relevant uh right now 37:36 37 minutes, 36 seconds but still if I look at probably the write offs of 1,500600 cr which we have used from our gains and another 20 so 37:44 37 minutes, 44 seconds it's a 3 4,000 cr uh book uh should we in our in our minds expect some 37:51 37 minutes, 51 seconds recoveries uh it's going to be a bounty itself but uh at least on the current 2800 cr because I'm not sure Barring 37:58 37 minutes, 58 seconds Sham life, we will not have uh much more capital gains left but uh in general more from just a recovery point of view rather than [clears throat] recognition. 38:08 38 minutes, 8 seconds Uh that should should be should we hope for uh some benefit on that side and probably the last question just attached 38:15 38 minutes, 15 seconds to this itself is on the capital adequacy. We are right now at around 19 and a half. uh now uh if you can you mentioned slightly in the opening 38:24 38 minutes, 24 seconds remarks of some of the levers which can free up some capital but if you can help us elaborate that till what time we don't need capital with this kind of a 38:32 38 minutes, 32 seconds growth yeah uh great question Sid on your first one which is should we expect I'm just 38:39 38 minutes, 39 seconds paraphrasing you should we expect um any sort of recoveries to come from all the 38:46 38 minutes, 46 seconds uh all the provisions that we have made in the legacy book you're saying that hey broadly we expect no further recognition issues and no further hits 38:55 38 minutes, 55 seconds um so probably no kind of negatives to the P&L going forward but are there any positives to be had the answer to that question is a qualified yes I we have 39:04 39 minutes, 4 seconds been conservative in the way we have provided over the last few quarters because we had some opportunities and some one-offs we have used that um and 39:13 39 minutes, 13 seconds it is reasonable to expect that as the unwind completes um between what we have on the book and a little bit of what we 39:20 39 minutes, 20 seconds have off the books in the form of AI if etc. There are a few hundred crores. I will not specify an exact amount. I just say that there are a few hundred crores 39:28 39 minutes, 28 seconds of potential um kind of rightbacks that uh that you can expect but I'm not specifying a number nor a specific time 39:36 39 minutes, 36 seconds period but you should expect that. I think there is there is something there in what you said in terms of the way we have gone about providing uh over the last few quarters. Your second question was on capital. Again a great question. 39:46 39 minutes, 46 seconds We ended the year uh ended the year and the quarter at 19.8 8%. We have said in the past that uh while the regulatory requirement is 15%. 39:56 39 minutes, 56 seconds If you get to the 17 and a half 18 kind of range we will probably be looking at uh raising capital. In this quarter if 40:06 40 minutes, 6 seconds you see our consumption has only been 50 basis points. Net consumption of capital has only been 50 basis points which means we have some runway ahead of us 40:15 40 minutes, 15 seconds when we are at about 20. Uh so we have like maybe four quarters of runway three to four quarters of runway depending on how you look at it and the kind of profitability we have in the coming 40:23 40 minutes, 23 seconds year. Um we have some runway left. Let's see let's see what we what we need to do. We have a we have some other levers as well to uh to take care of capital 40:31 40 minutes, 31 seconds needs if any. um uh you know, never say never on any of these things, but uh our current levels are healthy and um and 40:38 40 minutes, 38 seconds and consumption rates are still relatively modest. Uh and so we should be able to get through a few quarters uh pretty easily. 40:48 40 minutes, 48 seconds Got it. Perfect. Great. Thanks a lot, sir. Congratulations. Thank you. 40:52 40 minutes, 52 seconds Thank you. Next question is from the line of Ain Singh from MK Global Financial Services. Please go ahead. 41:02 41 minutes, 2 seconds Yeah. Uh good evening. Thanks for the opportunity. A couple of question. Uh the first one continuing on the capital part. Uh so if we were to see that you 41:11 41 minutes, 11 seconds know the balance sheet leverage it is still pretty uh much on the lower side. 41:16 41 minutes, 16 seconds So uh from the net worth that is on the balance sheet what all sort of an adjustment on regulatory capital because it seems a pretty big number. I mean is 41:25 41 minutes, 25 seconds it kind of a the deferred tax asset that front ended income? So that's a really I would say large number because the balance sheet le I mean equity is not 41:34 41 minutes, 34 seconds yet four times and the capital adequacy relatively lower. So that's one and particularly considering the fact that on the risk rate side also you will have 41:42 41 minutes, 42 seconds a mortgage side that will not that risk kind of a risk rate intensive. So that's one. The second one is on uh this thing 41:50 41 minutes, 50 seconds the tax now the given that you know the tax accumulated tax losses are close to $25,000 crores. uh what is the kind of a 41:58 41 minutes, 58 seconds timeline by which you need to kind of consume it? So just to get an idea that okay if that entire piece is going to provide you know attack. Thanks. 42:09 42 minutes, 9 seconds Uh yeah thank you Aina. Uh great questions. The first one um your 42:17 42 minutes, 17 seconds the deductions from capital. There are three main deductions from net worth to get to net owned funds. NOF is what goes into the numerator of C calculations. 42:26 42 minutes, 26 seconds Net worth is what you see on the balance sheet 28,000 crores. Um so what are the three deltas from here to NOS in the 42:33 42 minutes, 33 seconds three deltas are there there's one lot which is uh regular business as usual deductions which you will see in any any 42:40 42 minutes, 40 seconds lending company. So uh so things like um if uh you know cash position if you have uh for securization uh some uh 42:48 42 minutes, 48 seconds unamotized DSA uh fees etc or DSA payouts etc. some of that stuff will be sitting there that's one element. The 42:55 42 minutes, 55 seconds second element is DTA that has been created. We have about 2,000ish crores of DT 2,500 or 700 crores 2,700 crores 43:03 43 minutes, 3 seconds of total ETA that's on the balance sheet. That's number two. And the third deduction is investments um right which 43:10 43 minutes, 10 seconds is all the Shriam General and five and some of these other things all those in all those investments those three things 43:17 43 minutes, 17 seconds roughly equally distributed about 25 to 2700 each. Uh right is the number in all three of them. That's the delta between 43:25 43 minutes, 25 seconds what you see as net worth and what you what you will calculate as net owned funds. Uh right of these three the first is pretty normal right business as usual 43:34 43 minutes, 34 seconds even in the end state you should always expect to see that the second one which is DTA exists in our case because we have so much accumulator losses etc. So 43:42 43 minutes, 42 seconds we see we get the benefit of that from a PBT to pad standpoint but you have to pay for it a little bit in the form of um in the form of capital. So that's the 43:50 43 minutes, 50 seconds second one. The third one which is the investment is the one that can go away as we get d as we keep divesting more and more of the assets that part will go 43:59 43 minutes, 59 seconds away. So the gap that you see between uh network and innovat will narrow to that extent it'll it'll narrow by about a 44:06 44 minutes, 6 seconds third of what it is right now. So that's as far as capital is concerned. U your second question uh was um what was the question? 44:16 44 minutes, 16 seconds Tax ah tax. Okay. So the see the total we have about 24,500 or so of um of accumulated uh taxes uh 44:25 44 minutes, 25 seconds tax losses we have created about 2,100 crores of um loss related DTA right 44:32 44 minutes, 32 seconds carry forward loss related DTA that 2,100 crores is roughly equivalent to forex that's 8,400 crores so if you net 44:41 44 minutes, 41 seconds off that essentially you have 16,000 crores give or take roughly 16,000 crores of future profits of the company 44:50 44 minutes, 50 seconds are tax protected as far as P&L is concerned. That's the simplest way I can actually frame this. So, however long it 44:58 44 minutes, 58 seconds takes for us to consume 16,5 16,000 odd crores as long as that period is less than what is it 7 years is that what 2032 45:05 45 minutes, 5 seconds 2032 till about 2032 um then we can keep we can keep uh keep using it. So, 45:18 45 minutes, 18 seconds Okay. Okay. Uh clear. And just one again on this uh so in a normal course of business as you kind of now your profit start to go up and you start to sort of 45:27 45 minutes, 27 seconds so how will this uh thing this uh your carry forward losses will move it will keep creating DTA and I mean so will this DTA rising kind of it will be 45:36 45 minutes, 36 seconds offsetting. So how will the DTA kind of a typically you know the typical two and a half% kind of trajectory? every time we want to do it. 45:44 45 minutes, 44 seconds Yeah. See the uh the the way to kind of think about this is um every quarter we 45:51 45 minutes, 51 seconds will do an assessment of our um virtual certaintity of profits which we will discuss with our auditors every year. uh 45:58 45 minutes, 58 seconds roughly we will we will discuss this uh with our auditors and based on their um based on their advice uh we will create 46:06 46 minutes, 6 seconds DTA as necessary uh to um to uh to offset but from a P&L perspective the 46:14 46 minutes, 14 seconds way you will see it is that effectively your PBT uh and PAT will be pretty close 46:21 46 minutes, 21 seconds to uh the same except for some line items which are taxable uh like uh some dividend line items etc or some the line 46:28 46 minutes, 28 seconds items might be taxable but mo some other stuff but mostly you should see PBD equal to PAT for the foreseeable future 46:35 46 minutes, 35 seconds um and uh and and and hence for the next kind of 16 odd,000 crores of PBT uh from 46:43 46 minutes, 43 seconds a modeling perspective you can keep an uh effective tax rate in your model at a 46:50 46 minutes, 50 seconds very low number uh you know and unless something kind of dramatically changes from here that this is all with current 46:58 46 minutes, 58 seconds level of carry forward losses that we have. Any future carry forward losses that get created will add on to this and 47:05 47 minutes, 5 seconds every time we we get tax authorities approval on some carry forward losses uh they are valid from that point of time 47:13 47 minutes, 13 seconds for eight years eight years. [clears throat] Got it. Got it. Thank you. Thank you. Thank you. 47:20 47 minutes, 20 seconds Thank you. Before we take the next question would like to remind participants to ask the question please press star N1 on your phone now. 47:29 47 minutes, 29 seconds Next question is from the line of Nishin Sawate from KOTC securities. Please go ahead. 47:36 47 minutes, 36 seconds Uh thanks for taking my question. Uh maybe you touched upon this already but uh you know in terms of cost of funding 47:43 47 minutes, 43 seconds uh you know what is the difference between incremental and average cost of funds? Yeah. [clears throat] So, our um our stock cost of borrowing is about 8.8%. 47:53 47 minutes, 53 seconds In Q4, our incremental borrowing cost for long-term money was 8.4%. 47:58 47 minutes, 58 seconds Uh we didn't raise much short-term at all. So, I don't know. My guess would be that short-term will be like 7 quarter uh right now if we went to the market and started raising uh short uh money. 48:09 48 minutes, 9 seconds So, then you can take any mix between uh short-term money at 7 quarter and long-term money at 840. Uh that should give you a little bit of a sense of 48:16 48 minutes, 16 seconds where our uh where our Q1 will be. We are currently not raising anything short-term. We have uh we have only been doing long-term over the last four five months. 48:25 48 minutes, 25 seconds And and in terms of your bucket uh you know what could be I mean if I have to just take a normalized bucket how would that cost look like the bucket plus? 48:35 48 minutes, 35 seconds Oh okay. Okay. Like that. So see this I think we would this is still probably 48:42 48 minutes, 42 seconds um at at the higher end of the entire A+ range. Um if you look at the best in double A plus they are probably 50 basis 48:49 48 minutes, 49 seconds points better than this maybe 60 basis points better than this on the long term. 48:55 48 minutes, 55 seconds Sure. So so probably you touched upon this but you know now as your cost of funding comes down you know how does that really sort of feed into your asset side strategy? 49:03 49 minutes, 3 seconds Yeah. Do you see the composition changing? Yeah. Sorry. 49:07 49 minutes, 7 seconds Yeah. So two things there. we will take some of the delta into BNL and we'll use some of the delta to drive growth. So um 49:15 49 minutes, 15 seconds uh so effectively we will we will build some new businesses which we could not do you know when we were a double A uh 49:23 49 minutes, 23 seconds and that will help us actually drive growth and the rest we will essentially you know feed through to our DuPont and 49:30 49 minutes, 30 seconds uh and and uh and and get closer to our 3% uh return on AUM goals that we have shared with you all. So both of those 49:38 49 minutes, 38 seconds will happen. You've seen some early signs of that. uh you saw some of some of our high ticket lap and some of our uh mass affluent uh housing uh 49:47 49 minutes, 47 seconds disclosures this time those are more plus- like businesses uh right which we have been in anticipation of what cost was to come we have been building a 49:56 49 minutes, 56 seconds little bit of that muscle and as you can see we've made some decent progress you could see a little bit more of that um in the times to come as well so we were 50:03 50 minutes, 3 seconds a purely below prime player in the past now you could see us pivot and have a little bit of our portfolio which is a bit more primeike 50:12 50 minutes, 12 seconds Got it. And uh the second question is uh you know walking the uh you know inorganic route. Uh is there anything that you are sort of you know planning? 50:21 50 minutes, 21 seconds I I I I won't say on the cards but uh you know are you really thinking on those lines? 50:26 50 minutes, 26 seconds So yeah so we nothing has changed on this front as we've said it in the last couple of calls. I'll repeat like we are quite interested uh in in M&A. Uh the 50:35 50 minutes, 35 seconds pyramal house have had uh a DNA of of doing mergers and acquisitions and growing in organically. We continue to be interested. However, um uh if you 50:44 50 minutes, 44 seconds look at the history of the pyramal house, you will also realize that we are valuebased acquirers. Uh we we have limited interest in buying kind of perfect assets at fully priced in value. 50:56 50 minutes, 56 seconds Um uh you know we we'd rather find something which even if it's a little imperfect but it is at a value pricing. 51:01 51 minutes, 1 second We we'd prefer that kind of a that kind of a story. The market has not been producive for that kind of M&A in the in 51:08 51 minutes, 8 seconds the last uh in the last few quarters and last couple of years. But we remain interested. We remain interested in the spaces of micro finance, gold loans, uh 51:17 51 minutes, 17 seconds MSME, any of these spaces. Um you know, we remain interested and we do look at a lot of deals but we are but nothing's imminent. 51:28 51 minutes, 28 seconds Michelle, does that answer your question? Uh actually I think the management line has got cut off. Oh hi. Can you hear us? 51:35 51 minutes, 35 seconds Can you hear us? 51:36 51 minutes, 36 seconds Yeah. Yeah. Yeah. You Yeah. You're talking about the Yeah. 51:40 51 minutes, 40 seconds Sorry. I don't know. I I don't know where you lost us. So let me just quickly repeat. Um we remain interested in the spaces of micro finance, MSME, 51:47 51 minutes, 47 seconds gold etc. However, what we are looking for is an asset which is priced at value and not fully priced in. So we are okay 51:56 51 minutes, 56 seconds or okay to look at slightly imperfect assets uh where we believe with with infusion of management we can actually make the assets or take the assets to a 52:03 52 minutes, 3 seconds better place. Um uh but it needs to be at value which that strategy has not had much bite in the recent market because 52:11 52 minutes, 11 seconds everything has been priced well even assets in the mfi space. So which is not our style of of M&A. So we are we are still in the wait and watch mode but we 52:19 52 minutes, 19 seconds are looking at all transactions but nothing is imminent there and anything just on the on the promoter side is there any sort of a you know 52:27 52 minutes, 27 seconds kind of a kind of a holding uh you know thought process or threshold or something in in mind. 52:33 52 minutes, 33 seconds Uh the promoters have always held um kind of 45 odd percent we the promoter holding currently is 46% um we perfectly 52:42 52 minutes, 42 seconds happy with that situation and and promoters remain fully committed to supporting the company in whichever way it needs uh it needs to proceed. So no 52:50 52 minutes, 50 seconds there is there's nothing very specific to talk about there. 52:53 52 minutes, 53 seconds No I was just referring to you know any dilution that could happen because of a potential M&A. Yeah, but none of the M&As that we that would come our way in 53:01 53 minutes, 1 second the segments that I mentioned are large enough to really merit anything like% here or there, man. Like it's not going to move things too much. We not 53:10 53 minutes, 10 seconds transformational M&A right now. We don't need one. 53:13 53 minutes, 13 seconds Got it. Got it. Thank you very much and all the best. Thank you, Nent. 53:17 53 minutes, 17 seconds Thank you. Ladies and gentlemen, to ask a question, please press star one on your phone. Next question is from the line of Abijit Treval from Motilwal. 53:27 53 minutes, 27 seconds Please go ahead. Yeah, good evening. Am I audible? 53:30 53 minutes, 30 seconds Yes, hi sir. Uh sir, just uh two things. One is on slide 17, we have articulated a 53:38 53 minutes, 38 seconds target which is that roum for exit quarter Q4. Uh we want to take it up from 2.1 to 2.5 53:46 53 minutes, 46 seconds right so this trying to understand the levers here. Um so I mean the question here is that uh as we speak uh we we have said 53:56 53 minutes, 56 seconds in the past that we are working on improving the yields uh whether that comes to a change in product mix or even existing products in mortgages where we 54:05 54 minutes, 5 seconds are trying to increase the yields and at the same time this credit rating upgrade will give us some benefit uh on the cost 54:12 54 minutes, 12 seconds of borrowing side. I recall you saying in your opening remarks anywhere around 50 to 80 basis points. Um in addition to that I mean OPEX is something which has 54:21 54 minutes, 21 seconds been kind of coming down uh through a lot of concerted efforts efforts. Uh I recall you pointing that we'll now be 54:29 54 minutes, 29 seconds adding more branches in this presentation also you have shared that we have fored into gold lending now and plans to add more gold lending branches. 54:38 54 minutes, 38 seconds So, so I mean fair to suggest that um large part of this uh ro aum expansion that we're talking about will come from 54:47 54 minutes, 47 seconds from the margin side because your opex I don't know how to think about it might remain elevated right given that you're 54:55 54 minutes, 55 seconds already there in that band the guidance that you had put out even after lowering that band uh in your AI investor day so 55:03 55 minutes, 3 seconds and and credit costs I mean given how the environment is I think 1.5% 55:10 55 minutes, 10 seconds uh maybe uh well primed now right in terms of credit house so we think about the various fever 55:18 55 minutes, 18 seconds listen so there are you are pointing out to all the three things uh they are exactly the right things um you know they but I do think there is more play 55:27 55 minutes, 27 seconds in opex to assets um I I believe that we have we have another kind of you know 50 odd basis points that we can still do um 55:34 55 minutes, 34 seconds this is probably the last year or so that we can uh that we bring uh we can we can do this kind of opex narrative but I think the opex narrative is not 55:42 55 minutes, 42 seconds over um so we will continue to see that um so uh so hold on to that that will still be a meaningful part of the delta 55:50 55 minutes, 50 seconds the second big favorable delta of course is the nim story which as you rightly say is all going to be driven on the cost of borrowing side from the liability side rather than on the asset 55:58 55 minutes, 58 seconds side on the asset side yes we will have a little bit more um of unsecured and a little bit of gold both of which is uh 56:04 56 minutes, 4 seconds is yield accretive um but we also have a little bit of this prime thing that we will start to do on the whole yield should go up but even more so the margin 56:13 56 minutes, 13 seconds will go up a bit grow a bit more than where we are as our cost of borrowing adjusts to the double A plus reality right which we have not yet started we 56:21 56 minutes, 21 seconds have not borrowed even a single bond issue we've not done in the market ever since we became double A plus because the markets have not been conducive so over the next few years you'll see us go 56:29 56 minutes, 29 seconds there so you should expect to see the cost of borrowing fall so cost of borrowing and cost of an opex are the 56:36 56 minutes, 36 seconds two big areas of favorability and that's what should drive all the delta on the on the credit cost side even if there's a little bit of negative i.e 1.5 goes up 56:45 56 minutes, 45 seconds a little bit from here. We'll still be able to absorb that through the first two that I mentioned and hence we feel comfortable [clears throat] guiding toward two and a half for exit quarter. 56:55 56 minutes, 55 seconds Got it. Thank you. And the last question I had was maybe just just trying to clarify further while you've already spoken or answered a couple of 57:04 57 minutes, 4 seconds participants in this call. um this this unsecured segment basically unsecured business loans and and PN u I find it a 57:14 57 minutes, 14 seconds little difficult to understand uh that how is it that despite disruptions in various supply chains u I mean you as 57:23 57 minutes, 23 seconds well as other lenders who've reported until now have not seen any alarming impact of that so I mean should we then 57:32 57 minutes, 32 seconds conclude that maybe some second order third order uh effects of whatever disruption that we are seeing from the 57:39 57 minutes, 39 seconds West Asia war might come in the coming months or do you think that customers and particularly self-employed and 57:47 57 minutes, 47 seconds business customers are are resilient and they have managed the disruptions very well? 57:52 57 minutes, 52 seconds The the thing is like they will it is inconceivable if the war continues for a while longer it is inconceivable that you will see no effect. 58:06 58 minutes, 6 seconds Q2 event. I don't think you there was no chance of seeing it in Q4. I don't think you'll see it in Q1 either. But in Q2, 58:13 58 minutes, 13 seconds you should watch. Um because every client does have a little bit of a a little bit of a margin of safety. They 58:20 58 minutes, 20 seconds can they can go on for a month or two uh right even after they start feeling effects of uh of business slowdown. They will go on for a month or two. After 58:28 58 minutes, 28 seconds that, they will slowly become tardy in their uh in their repayment. and then it takes them 3 months for them to actually flow into 90-day bucket. So this all 58:36 58 minutes, 36 seconds will take time. So watching a 90-day uh you know uh delinquency metric it it is not going to move anytime soon. My guess 58:44 58 minutes, 44 seconds is July August is when you can actually see that outcome if at all. And that's why bounce rates are important to watch. 58:50 58 minutes, 50 seconds That's why you if you heard our earlier commentary we said that in April the bounce rates of the segment are the same as in March. Surprising but true. Uh 58:59 58 minutes, 59 seconds let's we will keep watching it. like we don't know and we shouldn't guess where we you know this thing might hit uh kind 59:07 59 minutes, 7 seconds of it is it it's not our job to reason out why something is happening or not happening it is our job to watch it like a hawk and react the moment we see 59:15 59 minutes, 15 seconds something happening so far nothing much to report yeah this is useful uh thank you so much Jan sir I wish you and your team the 59:24 59 minutes, 24 seconds very best thank you thank you we'll take a last question from the line of Mikram Dami from Dan family office. Please go ahead. 59:34 59 minutes, 34 seconds Hi, am I audible? Yes, you are. 59:37 59 minutes, 37 seconds Congratulations on a good set of numbers. Um, I had two questions. First is could you explain the 900 cr the two 59:45 59 minutes, 45 seconds line items on the PL the net loss on fair value changes like almost,000 crores and the 590 cr uh impairment that you've 59:53 59 minutes, 53 seconds taken. And the second one was around your branch expansion. you've sort of gone from 570 to from 57 to 700 now 1:00:01 1 hour, 1 second you're going to 880 as per your uh uh presentation so given that any sort of change can we expect in the opex to aum 1:00:10 1 hour, 10 seconds because new branches will take time to bring up to vintage so far has done very well so on these two things thank you yeah no thanks for saying that see on 1:00:17 1 hour, 17 seconds the first one um you know you point to two items which are um which are write down the markdowns we took in this 1:00:26 1 hour, 26 seconds quarter to make good use of the one-time gains that we got. You might recall that there are two important onetime gains that we received this quarter. Uh one 1:00:35 1 hour, 35 seconds was uh the uh the deferred comp component of uh the pyramal imaging sale. Um uh and that was uh that was 1:00:43 1 hour, 43 seconds about 1,300 crores or thereabouts and there was a 300 odd cr 250 odd crane on the sale of uh the Sri Lam life 1:00:51 1 hour, 51 seconds insurance business right so we had the 1500 cr we wanted to not take it through to P&L or we wanted to kind of uh 1:01:00 1 hour, 1 minute strengthen the balance sheet appropriately now that we got that uh uh we we got that bounty what the the line 1:01:07 1 hour, 1 minute, 7 seconds items you're referring to are our ways of strengthening the balance sheet i.e. 1:01:12 1 hour, 1 minute, 12 seconds identifying either areas where potentially in the future some losses could come and to preempt that and 1:01:19 1 hour, 1 minute, 19 seconds actually take you know roll that uh to now and then take the hits now itself or um areas where 1:01:28 1 hour, 1 minute, 28 seconds in in in in being sort of prudent it is appropriate to just put something away even though there might be a chance that 1:01:35 1 hour, 1 minute, 35 seconds some of it might come back to you in the future. I don't want to go into it in any more detail than that but suffice to say that this has helped us clean up the 1:01:43 1 hour, 1 minute, 43 seconds old legacy book quite nicely and also created uh you know some pockets of conservatism in the um in the balance 1:01:50 1 hour, 1 minute, 50 seconds sheet uh which can help us in a rainy day in the future. So can I assume that there you just broadly increased your buffer more to do with the legacy in this? 1:02:00 1 hour, 2 minutes I think it's a I think it's a fair way to talk about it or the way I say this is that we have the the increase in our safety buffer is probably a third of uh 1:02:09 1 hour, 2 minutes, 9 seconds of of the entire hit. The other two/3 is probably would have come to us anyway but maybe over the next two years. Okay, good to know. Thank you. 1:02:17 1 hour, 2 minutes, 17 seconds Thank you. Oh, there was a second question on opex to assets and whether opex to assets is likely to increase because we're investing new in branches. 1:02:24 1 hour, 2 minutes, 24 seconds Uh the answer for next year is no. We have come up with our branch plan in such a way that our opex to assets will 1:02:31 1 hour, 2 minutes, 31 seconds continue to fall. And uh let me restate something I've said I think in a previous call that if it comes to choosing between a declining opex to 1:02:40 1 hour, 2 minutes, 40 seconds assets ratio and putting up new branches in this year our bias will still be towards the opex to assets curve. We 1:02:47 1 hour, 2 minutes, 47 seconds want the office to assets curve to come down for one more year. After that, we might be more comfortable for it to be stable, but we want it to come down for 1:02:55 1 hour, 2 minutes, 55 seconds one more year. So, I don't think it'll come to making that hard choice, but if it does come to making that hard choice, we will choose in favor of the opex 1:03:02 1 hour, 3 minutes, 2 seconds curve rather than in favor of branch uh branch openings. Let me also add that the areas where we are adding branches are gold and uh and rural lending. A 1:03:11 1 hour, 3 minutes, 11 seconds rural a gold branch takes about one/ird of the operating expense of an of a of an urban regular urban branch on an 1:03:19 1 hour, 3 minutes, 19 seconds annualized basis about one/3. A rural branch takes about onetenth the uh level of investments of an urban branch. So these two categories where we 1:03:28 1 hour, 3 minutes, 28 seconds are growing branches they are actually much cheaper branches than uh than what we regularly do in our full service branches. So uh we should be okay. But 1:03:36 1 hour, 3 minutes, 36 seconds if if my math is wrong and if you end up seeing that opex curve starts to move up, you will probably see us give up on the on the branch growth but not give up on the opex curve. 1:03:46 1 hour, 3 minutes, 46 seconds Very very useful. Thank you so much. Thank you. 1:03:51 1 hour, 3 minutes, 51 seconds I now have the over for closing comments. Thank you and over to you sir. 1:03:58 1 hour, 3 minutes, 58 seconds Uh thank you very much everybody. Have a great evening. Thanks for participating actively in our call. Uh we look forward to hearing any more from you. If you have more questions, please do reach out 1:04:06 1 hour, 4 minutes, 6 seconds to Ravi and the IR team and they'll be able to share uh more data with you. Uh thanks and have a great evening. 1:04:12 1 hour, 4 minutes, 12 seconds Thank you members of the management. On behalf of that concluding this process, we thank you for joining us and even now 1:04:19 1 hour, 4 minutes, 19 seconds disconnect your